Finance (FNCE) 403

Risk Management (Revision 2)


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Delivery Mode: Individualized study online or grouped study**

Credits: 3

Area of Study: Applied Studies
(Business and Administrative Studies)

Prerequisite: FNCE 370 or equivalent. MATH 260 or equivalent is recommended.

Centre: Faculty of Business

FNCE 403 has a Challenge for Credit option

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**Note:Students registering in grouped study, or grouped study international mode are advised that there may be some differences in the evaluation and course materials information indicated below. To obtain the most up-to-date information, contact the Faculty of Business Student Support Centre at 1-800-468-6531.


FNCE 403 provides an introduction to risk management, an area with increasing importance in both modern financial academia and financial industry. The course will focus on risk management using derivative securities. The main objectives of FNCE 403 are to

  • introduce the basic concepts and methodologies of risk management using derivative securities, including options, futures, forwards, and swaps.
  • provide students with an introduction to the basic characteristics and valuation of various derivative securities.
  • explore the applications of derivatives to manage various risks such as market risk, currency risk, interest rate risk, and credit risk.


Unit 1: Introduction

  • Lesson 1: Derivative Securities
  • Lesson 2: Some Important Concepts in Derivative Markets
  • Lesson 3: The Role and Some Criticisms of Derivative Markets

Unit 2: Options

  • Lesson 4: Options Markets
  • Lesson 5: Basic Option Strategies
  • Lesson 6: Advanced Option Strategies

Unit 3: Option Pricing

  • Lesson 7: Principles of Option Pricing
  • Lesson 8: Option Pricing—The Binomial Model
  • Lesson 9: Option Pricing—The Black-Scholes-Merton Model

Unit 4: Forwards and Futures

  • Lesson 10: Forward and Futures Markets
  • Lesson 11: Pricing Forwards and Futures
  • Lesson 12: Futures Hedging

Unit 5: Swaps and Interest Rate Derivatives

  • Lesson 13: Interest Rate Swaps
  • Lesson 14: Currency Swaps
  • Lesson 15: Interest Rate Forwards and Options

Unit 6: Financial Risk Management

  • Lesson 16: Financial Risk Management Techniques
  • Lesson 17: Risk Management in Organizations


To receive credit for FNCE 403, you must pass the final examination and achieve a course composite grade of at least a “D” (50 percent). The passing grade for the examination, under Athabasca University's alpha grading system, is “D” (50 percent). Your final mark will be determined by your marks on three assignments and a final examination. The chart below provides the credit weight associated with each of these requirements.

Assign 1 Assign 2 Assign 3 Final Exam Total
15% 15% 15% 55% 100%

To learn more about assignments and examinations, please refer to Athabasca University's online Calendar.

Course Materials


Chance, D. M., and Brooks, R. (2010). An introduction to derivatives & risk management, (8th ed.). Mason, OH: South-Western Cengage Learning. ISBN 978-0-324-60121-3

Other materials

All other materials will be available to students online.

Challenge for Credit Course Overview

The Challenge for Credit process allows students to demonstrate that they have acquired a command of the general subject matter, knowledge, intellectual and/or other skills that would normally be found in a university level course.

Full information for the Challenge for Credit can be found in the Undergraduate Calendar.

Challenge Evaluation

To receive credit for the FNCE 403 challenge registration, you must achieve a grade of at least “D” (50 percent) on the examination.

Paper Exam (3 hours)

Undergraduate Challenge for Credit Course Registration Form

Athabasca University reserves the right to amend course outlines occasionally and without notice. Courses offered by other delivery methods may vary from their individualized-study counterparts.

Opened in Revision 2, May 13, 2011.

View previous syllabus